Bill Text: CA AB1091 | 2013-2014 | Regular Session | Chaptered
Bill Title: Finance and mortgage lenders.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2013-09-06 - Chaptered by Secretary of State - Chapter 243, Statutes of 2013. [AB1091 Detail]
Download: California-2013-AB1091-Chaptered.html
BILL NUMBER: AB 1091 CHAPTERED
BILL TEXT
CHAPTER 243
FILED WITH SECRETARY OF STATE SEPTEMBER 9, 2013
APPROVED BY GOVERNOR SEPTEMBER 6, 2013
PASSED THE SENATE AUGUST 19, 2013
PASSED THE ASSEMBLY AUGUST 22, 2013
AMENDED IN SENATE JUNE 25, 2013
AMENDED IN ASSEMBLY MAY 6, 2013
AMENDED IN ASSEMBLY APRIL 18, 2013
INTRODUCED BY Assembly Member Skinner
FEBRUARY 22, 2013
An act to amend Sections 22050, 22161, and 22712 of, and to add
Sections 22707.5 and 50501.5 to, the Financial Code, relating to
lending.
LEGISLATIVE COUNSEL'S DIGEST
AB 1091, Skinner. Finance and mortgage lenders.
Existing law, the California Finance Lenders Law, provides for the
licensure and regulation of finance lenders and brokers. Existing
law, the California Residential Mortgage Lending Act, provides for
the regulation and licensure of residential mortgage lenders,
servicers, and originators. Existing law makes the Commissioner of
Corporations responsible for administering the law and act until July
1, 2013, and thereafter the Deputy Commissioner of Business
Oversight for the Division of Corporations will be responsible,
pursuant to the Governor's Reorganization Plan No. 2 of 2012. A
willful violation of the law or act is a crime.
Existing law exempts, among others, California business and
industrial development corporations, licensed pawnbrokers, and
persons making no more than one commercial loan in a 12-month period
from the California Finance Lenders Law.
This bill would exempt from the California Finance Lenders Law
California business and industrial development corporations when
acting under federal law or other state authority, licensed
pawnbrokers when acting under the authority of that license, and
persons making 5 or fewer commercial loans in a 12-month period as
long as the loans are incidental to the business of the person
relying on the exemption. The bill would, among other things,
prohibit a person, subject to the California Finance Lenders Law,
from knowingly misrepresenting any material information regarding a
transaction and committing any act that constitutes fraud or
dishonest dealings. By expanding the definition of a crime, the bill
would impose a state-mandated local program.
Upon inspection, examination, or investigation, if the
commissioner has cause to believe that a licensee under the
California Finance Lenders Law or the California Residential Mortgage
Lending Act is violating or has violated the respective law
applicable to the licensee, or that any other person is violating
those laws, the bill would authorize the commissioner or his or her
designee to issue a written citation to the licensee or person that
may contain an order to correct the violation or violations and an
assessment of an administrative fine not to exceed $2,500. The bill
would require the commissioner, if the commissioner after
investigation has reasonable grounds to believe that a person is
conducting business under the California Finance Lenders Law in an
unsafe or injurious manner, to issue a written order directing the
discontinuance of the unsafe or injurious practice.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22050 of the Financial Code is amended to read:
22050. (a) This division does not apply to any person doing
business under any law of any state or of the United States relating
to banks, trust companies, savings and loan associations, insurance
premium finance agencies, credit unions, small business investment
companies, community advantage lenders, California business and
industrial development corporations when acting under federal law or
other state authority, or licensed pawnbrokers when acting under the
authority of that license.
"Community advantage lender" means an entity authorized by the
United States Small Business Administration to deliver community
advantage loans.
(b) This division does not apply to a check casher who holds a
valid permit issued pursuant to Section 1789.37 of the Civil Code
when acting under the authority of that permit, and shall not apply
to a person holding a valid license issued pursuant to Section 23005
of the Financial Code when acting under the authority of that
license.
(c) This division does not apply to a college or university making
a loan for the purpose of permitting a person to pursue a program or
course of study leading to a degree or certificate.
(d) This division does not apply to a broker-dealer acting
pursuant to a certificate then in effect and issued pursuant to
Section 25211 of the Corporations Code.
(e) This division does not apply to any person who makes five or
fewer loans in a 12-month period, these loans are commercial loans as
defined in Section 22502, and the loans are incidental to the
business of the person relying upon the exemption.
(f) This division does not apply to any public corporation as
defined in Section 67510 of the Government Code, any public entity
other than the state as defined in Section 811.2 of the Government
Code, or any agency of any one or more of the foregoing, when making
any loan so long as the public corporation, public entity, or agency
of any one or more of the foregoing complies with all applicable
federal and state laws and regulations.
SEC. 2. Section 22161 of the Financial Code is amended to read:
22161. No person subject to this division shall do any of the
following:
(a) Make a materially false or misleading statement or
representation to a borrower about the terms or conditions of that
borrower's loan, when making or brokering the loan.
(b) Advertise, print, display, publish, distribute, or broadcast,
or cause or permit to be advertised, printed, displayed, published,
distributed, or broadcast in any manner, any statement or
representation with regard to the business subject to the provisions
of this division, including the rates, terms, or conditions for
making or negotiating loans, that is false, misleading, or deceptive,
or that omits material information that is necessary to make the
statements not false, misleading, or deceptive, or in the case of a
licensee, that refers to the supervision of the business by the state
or any department or official of the state.
(c) Commit an act in violation of Section 1695.13 of the Civil
Code.
(d) Engage in any act in violation of Section 17200 of the
Business and Professions Code.
(e) Knowingly misrepresent, circumvent, or conceal, through
subterfuge or device, any material aspect or information regarding a
transaction to which the person is a party.
(f) Commit an act that constitutes fraud or dishonest dealings.
SEC. 3. Section 22707.5 is added to the Financial Code, to read:
22707.5. (a) If, upon inspection, examination, or investigation,
the commissioner has cause to believe that a licensee or other person
is violating any provision of this division or any rule or order
thereunder, the commissioner or his or her designee, may issue a
citation to the licensee or person in writing, describing with
particularity the basis of the citation. Each citation may contain an
order to correct the violation or violations identified and provide
a reasonable time period or periods by which the violation or
violations must be corrected. In addition, each citation may assess
an administrative fine not to exceed two thousand five hundred
dollars ($2,500) that shall be deposited in the State Corporations
Fund. In assessing a fine, the commissioner shall give due
consideration to the appropriateness of the amount of the fine with
respect to factors including the gravity of the violation, the good
faith of the person or licensees cited, and the history of previous
violations. A citation issued or a fine assessed pursuant to this
section, while constituting punishment for a violation of law, shall
be in lieu of other administrative discipline by the commissioner for
the offense or offenses cited, and the citation and fine payment
thereof by a licensee shall not be reported as disciplinary action
taken by the commissioner.
(b) Notwithstanding subdivision (a), nothing in this section shall
prevent the commissioner from issuing an order to desist and refrain
from engaging in a specific business or activity or activities, or
an order to suspend all business operations to a person or licensee
who is engaged in or who has engaged in continued or repeated
violations of this division. In any of these circumstances, the
sanctions authorized under this section shall be separate from, and
in addition to, all other administrative, civil, or criminal
remedies.
(c) If, within 30 days from the receipt of the citation, the
licensee or person cited fails to notify the department that he or
she intends to request a hearing as described in subdivision (d), the
citation shall be deemed final.
(d) Any hearing under this section shall be conducted in
accordance with Chapter 5 (commencing with Section 11500) of Part 1
of Division 3 of Title 2 of the Government Code.
(e) After the exhaustion of the review procedures provided for in
this section, the commissioner may apply to the appropriate superior
court for a judgment in the amount of the administrative fine and an
order compelling the cited licensee or person to comply with the
order of the commissioner. The application, which shall include a
certified copy of the final order of the commissioner, shall
constitute a sufficient showing to warrant the issuance of the
judgment and order.
SEC. 4. Section 22712 of the Financial Code is amended to read:
22712. (a) Whenever, in the opinion of the commissioner, any
person is engaged in the business as a broker or finance lender, or a
mortgage loan originator, as defined in this division, without a
license from the commissioner, or any licensee is violating any
provision of this division, the commissioner may order that person or
licensee to desist and to refrain from engaging in the business or
further violating this division. If, within 30 days after the order
is served, a written request for a hearing is filed and no hearing is
held within 30 days thereafter, the order is rescinded. For purposes
of this section, "licensee" includes a mortgage loan originator.
(b) Notwithstanding subdivision (a), if, after an investigation,
the commissioner has reasonable grounds to believe that a person is
conducting business in an unsafe or injurious manner, the
commissioner shall, by written order addressed to that person, direct
the discontinuance of the unsafe or injurious practices. The order
shall be effective immediately, but shall not become final except in
accordance with the provisions of Section 22717.
SEC. 5. Section 50501.5 is added to the Financial Code, to read:
50501.5. (a) If, upon inspection, examination, or investigation,
the commissioner has cause to believe that a licensee or person is
violating or has violated any provision of this division or any rule
or order thereunder, the commissioner or his or her designee may
issue a citation to that licensee or person in writing, describing
with particularity the basis of the citation. Each citation may
contain an order to correct the violation or violations identified
and provide a reasonable time period or periods by which the
violation or violations must be corrected. In addition, each citation
may assess an administrative fine not to exceed two thousand five
hundred dollars ($2,500) that shall be deposited in the State
Corporations Fund. In assessing a fine, the commissioner shall give
due consideration to the appropriateness of the amount of the fine
with respect to factors including the gravity of the violation, the
good faith of the person or licensees cited, and the history of
previous violations. A citation issued and a fine assessed pursuant
to this section, while constituting punishment for a violation of
law, shall be in lieu of other administrative discipline by the
commissioner for the offense or offenses cited, and the citation and
fine payment thereof by a licensee shall not be reported as
disciplinary action taken by the commissioner.
(b) Notwithstanding subdivision (a), nothing in this section shall
prevent the commissioner from issuing an order to desist and refrain
from engaging in a specific business or activity or activities, or
an order to suspend all business operations to a person or licensee
who is engaged in or who has engaged in continued or repeated
violations of this division. In any of these circumstances, the
sanctions authorized under this section shall be separate from, and
in addition to, all other administrative, civil, or criminal
remedies.
(c) If, within 30 days from the receipt of the citation, the
person cited fails to notify the department that the person intends
to request a hearing as described in subdivision (d), the citation
shall be deemed final.
(d) Any hearing under this section shall be conducted in
accordance with Chapter 5 (commencing with Section 11500) of Part 1
of Division 3 of Title 2 of the Government Code.
(e) After the exhaustion of the review procedures provided for in
this section, the commissioner may apply to the appropriate superior
court for a judgment in the amount of the administrative fine and an
order compelling the cited person to comply with the order of the
commissioner. The application, which shall include a certified copy
of the final order of the commissioner, shall constitute a sufficient
showing to warrant the issuance of the judgment and order.
SEC. 6. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
